Japan: Poised for a Comeback?

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Contrary to its record of miracle economic growth in the second half of the 20th century, Japan has recently been appearing in the news for the wrong reasons. Just this past week the Fukushima Dai-ichi administration has brought to light that it was struggling to store the 200, 000 tons of contaminated water used to cool the plant’s broken nuclear reactor.

Experts agree that this volume of radioactive water poses a significant danger to the environment, and some speculate that water may already be leaking into the ocean and water supplies. The magnitude of the repercussions of the Fukushima incident seems to be a result of a lack of preparation and incompetence at every level. For a country prone to natural disasters and so reliant on nuclear power, it is worrying that more rigid regulations and safeguards that could have prevented the incident were not already in place. Even after the leak the government mishandled the situation: reaction time was slow, erroneous information provided led to the evacuation of people into radiated zones, and multiple cover-ups took place that hid the extent of the disaster. The contaminated water storage problem is testament to the government’s continuing inability to contain the aftermaths of the incident. Is Japan simply going through a period of poor luck, or is the Fukushima disaster symptomatic of the decline of the empire of the rising sun?

Unfortunately, there is strong evidence to support the latter claim. The correlation between demography and the economy is visible throughout history. Japan is the world’s fastest ageing population, and according to The Economist 40% of its population will be over 65 by 2050. Its birthrate has been steadily falling for decades, and unless this changes Japan’s productivity will soon be unable to keep up with its stunted workforce. Japan’s shrinking population can be partially explained by its high life expectancy (83.91 years at birth) and low mortality rates, but the consistently decreasing birth rates suggest conditions that are unfavourable to having children. The high housing prices in Japan’s major cities, particularly Tokyo which represents a large segment of the urban workforce, means that families often cannot afford living space for more than one child. Japan was one of the first countries to encourage modern family planning methods such as condoms and abortions, and this created a deep-rooted practice of meticulous control of family sizes.

The Japanese government contributes to inhibiting birth rates through their policies towards women. Japan ranked a dismal 98th place on the 2011 World Economic Forum report on gender equality (behind China), and despite the increasing number of women joining the workforce, the ruling Democratic Party has done nothing to protect their rights. The empowerment of women as breadwinners of their households came at the price of insecurity in the professional sphere. Women too often have to choose between withholding from producing offspring altogether to avoid jeopardizing their careers, or retreating back to their conventional role as caretakers. A strategist at Goldman Sachs estimated that if female employment were to equal men’s, it could boost the Japanese gross domestic product by up to 15%. Encouraging the emergence of women in the working world and protecting their rights could kill two birds with one stone: it would give working women the security to have children and would give a much needed boost to a dwindling and male-dominated workforce.

The reluctance of the government to introduce such measures seems to originate from the same rationale as their policies on immigration. The net immigration into Japan is close to zero at a time when the world is scrambling to import foreign talent, and the state hands out a dismal 15 000 naturalizations per year. This skepticism of women and as an asset to the country is the remains of a highly conformist and patriarchal society. The chasm between Western and Japanese culture was never seen as clearly as during the Second World War. The allied forces were flabbergasted by the kamikaze pilots’ extreme application of the Bushido (literally ‘way of the warrior’). Although this outdated conception of honor has faded with time, its vestiges still shackle the full potential of Japanese society.

Despite the increasingly grim situation of its demographics with a growing elderly population, shrinking workforce and lack of ethnic diversity, Japan’s demise is not around the corner. The 68 Japanese companies in the 2012 Forbes Global 500 list is a testament of its central role to the world economy, particularly in the motoring and technology realms. The focus of its major companies on consumer goods could also mitigate the impact of its dwindling population on productivity levels as new technologies such as task-specific robots and 3D printing will reduce its reliance on brute manpower.

However, the upcoming prime minister elections in the next few months do not leave much room for optimism. The opposing Liberal Democratic Party, poised to replace the current Democratic party, is led by former Prime Minister Shinzo Abe. He recently visited the Yasukuni shrine to the war victim, which controversially also honors Japanese war criminals. Abe previously resigned as Prime Minister because of illness and a series of blunders. His victory would only be a backlash to the growing discontent with the current government, particularly its failure to reach a consensus on Japan’s nuclear policy. It seems unlikely that either party can set Japan back on a path of growth and progress. However, history has shown that Japan has a bounce-back potential to be reckoned with. For an inhospitably mountainous island with virtually no natural resources, it has already done rather well.